Hello!
Today we will be switching gears from our usual content. Today you will be learning about what WE have been learning about the past week! We learned about COGS (Cost of Goods Sold), expenses, gross profit, and break even.
Let us start with COGS: the cost of goods sold. We learned that when you run a business, you must factor in the amount of money you spend to make the product, cost to run your website, booth, etc. In class, we were all split into groups of three. We were tasked to making a modeling the City Group Center building out of Legos. Each dot on each block costs 10 cents. The group that made the cheapest building that did not fall won. My group won.
Andrew Moore from Johannesburg, South Africa, Arnold Reinhold - Citigroup Center at 601 Lexington Avenue (1977)
From left to right : Duck tower, duck church, and of course Duck. Winning group's tower. The total ended up being 78 dollars. *Picture taken by H.A blog writer
Now we will learn about Gross Profit. Gross profit is the profit you make after COGS is taken out of your pocket. The term, "gross profit" gets its name because it is so GROSS how much money is never actually exchanged into your hands.
We also learned about revenue. Revenue is all the money businesses make before any costs are taken out. Revenue is NOT your profit. To find revenue, multiply units sold times price per unit.
Finally, we will learn about breaking even. Breaking even is when you make a profit equaling the exact dollar amount you spent to make the item you are selling, and any expenses to sell the item. You break even when you go from -$ to $0. To not go into debt and sink your ship, you must break even. To have a successful business, you have made a higher profit than just breaking even.
Wrapping up, I want to introduce you to Stephen. We will hear from him in our next blog post next week. Stephen is another Frederick Douglass Alumni.
See you next week!
H